What is a key feature of whole life insurance?

Whole life insurance is characterized by its cash value component, which distinguishes it from term life insurance. As policyholders pay their premiums, a portion of these payments builds up as cash value over time. This cash value can grow at a guaranteed rate and may also accumulate dividends, depending on the policy.

The presence of this cash value allows policyholders not only to have life insurance coverage for their entire lifetime, as long as premiums are paid, but also to borrow against this value or withdraw funds during their lifetime if needed. This dual benefit of lifelong coverage combined with the potential for cash value accumulation is a fundamental aspect of whole life insurance, making this choice the most accurate description of its key feature.